Archive for April, 2009

The second half of the 20th century was not exactly the golden age of letters. Yet across the face of this wide Sahara one great canyon cuts like a scar – an Everest in reverse, a terrestrial Marianas, a vast sun-baked trench carved by some unimaginable natural harrow into the parched gravel of an already-bleak century.

I refer, of course, to the 1980s. In my opinion, this decade produced exactly one artistic achievement that will stand the test of time: Skinny Puppy. And in letters? Though we may never know why, in the ’80s it was easier for a rich man to pass through the eye of a camel than for anyone to write a decent book. Even Hunter Thompson was unmanned by the age – I mean, really, The Curse of Lono?

So it’s with some surprise that I present this selection from Luigi Barzini’sThe Europeans – copyright, 1983. The exception is easy to explain. Barzini, a hereditary aristocrat of Italian liberal journalism, was no parbaked Boomer, but a man of the Interbellum. Moreover, the effort must have exhausted the old lion – he seems to have died in 1984.

Before we read Barzini, we need to be clear on the context: Barzini was no reactionary, nor even a conservative. He was a liberal, an Anglophile and Americanist, educated at Columbia, and an unabashed fan of European unification under American political traditions. But he was a liberal of the old world – a considerably looser straitjacket than the word at present implies. Moreover, when he wrote The Europeans he was neither young nor dense, and Conquest’s law had done its usual work.

Here is a passage from his chapter on Italy. (UR readers may also enjoy Barzini’s The Italians, the work from which I learned that Garibaldi didn’t unite Italy – he divided Africa.) Note how remarkably open Barzini is about who actually called, and calls, the shots in postwar Europe. He was certainly in a position to know.

So: a snapshot of history, not without some contemporary relevance. I have taken the liberty of adding a few paragraph breaks for readability on teh Intertubes.

Miscalculations, sometimes irreparable, are also constantly made by foreigners in their estimates of the Italian political and economic perspectives. Inevitably, cures for Italian ills based on authoritative diagnoses, cures that might be excellent for other countries, are disastrously wrong.

In the late fifties and early sixties, when the Italian economy was enjoying a boom and political problems were being gradually solved, save one, the Communist threat, foreign specialists decided the only hope for the country was not what common sense would have recommended, the strengthening of the coalition of center parties, which, with American help, had rapidly reconstructed the country after the war (all efficient governments are, whatever they call themselves, center governments). Foreign experts thought that a new Center-Left government would be the right medicine, a coalition of Christian Democrats and Socialists.

It must be honestly pointed out that, as usual, these foreigners were deceived by Italian words, which seldom mean exactly what they seem to say. Italian Socialists of that generation were not what these people imagined. They were also very dissimilar from the Italian Socialists of today. They were then incredibly behind the times. Most of them were verbal extremists. Many clung to the 1870 myths of La Commune and to the excessive impossible hopes of the beginning of this century, some were Anarcho-Syndicalists, others were pure anarchists and a few were terrorists at heart. They believed the economy was the only motor of history but knew almost nothing about economics. They were openly pro-Communist, resigned to accept Soviet leadership in international affairs, resigned also to see the Italian Communists take power, and worked strenuously to help them destroy what was left of the bourgeois liberal state. The secretary of the party, Francesco de Martino, repeatedly threatened: “We’ll nationalize everything in the country except barber shops.” (The odd exception was probably because Professor de Martino, being Neapolitan, presumably did not use a razor, but like most middle-aged southerners, was shaved every afternoon after the siesta by a friendly barber, whose autonomy from the state he was understandably determined to preserve for the safety of his own hirsute jowls.)[…]The plan to form a Center-Left coalition was first conceived by Italian politicians for many different reasons of their own, but also custom-designed to seduce the Americans, without whose approval and backing the Italians curiously believed it could not be carried out. The Americans immediately saw in it a wonderful way to fulfill their double vocation: the pragmatic one of leaving no problem unsolved and their missionary obligation to spread democracy and improve everything in sight.

They spared neither effort nor money to implement the plan as quickly as possible. They thought it was the only way to cure all the Italian ills at once, so why wait? It would strengthen the decaying state; check rampant corruption; generally enforce law and order; defeat the Mafia, the Camorra, and the emboldened unattached criminals; discourage the class struggle; decrease the number of ruinous strikes; swell production and imports; slow down inflation; levitate the standard of living; and as a result, encourage domestic and foreign investments.

Above all, they believed it to be a certain way to isolate and weaken the pro-Soviet Communists, by depriving them of their Socialist vassals, and free Italy once and for all from the menace of a totalitarian takeover. A Soviet-dominated peninsula cutting the Mediterranean in half obviously would have thrown all NATO plans and the security of the United States itself into disarray.[…]The plan might possibly have produced in some other country all the wonderful effects the Americans expected. In unpredictable Italy, it produced the exact contrary. It was estimated that in the end the plan cost as much as a lost war and retarded social and economic progress for at least one generation. Its failure also came from external circumstances, to be sure, the rise in the price of oil, the revolt of the young and the workers in the late sixties, but was principally due to the wrong diagnosis. The state (what was left of it after twenty years of arbitrary dictatorship and a crushing military defeat) practically collapsed under the burden of a vastly enlarged number of new tasks, some of them admittedly useful and necessary, but with which the bureaucracy, such as it was, was absolutely unprepared to cope. Among them was the enforcement of some of the most ambitious and intricate legislation ever passed outside Byzantium.

Furthermore, the Christian Democrats and the Socialists, who had considered with hostility the secular liberal democratic state since its inception in 1861, joyfully kept on dismantling it. Too late they realized it had become an indispensable tool, not only to govern in the ordinary way, but above all to carry out any left-wing policy, which notoriously relies on an ever-increasing state intervention in every sector of the economy. Corruption grew to Levantine proportions. The police were demoralized, paralyzed, and ordered not to use their weapons even when attacked.

Only after Aldo Moro was kidnapped and killed did the more responsible politicians in power begin to realize that the dismantling of law-enforcement agencies did not harm their “class enemies” alone but was detrimental for the whole country and could be mortally dangerous for each of them. Law and order were violated by everybody as a matter of course with impunity; even sedate elderly drivers allowed themselves to cross red lights. Bank robberies and kidnappings of well-to-do gentlemen proliferated. Terrorists dynamited trains, cars, and office buildings and murdered innocent people almost every day. Every request of the trade unions was immediately granted without discussion. The endemic riots, the perennial strikes, the occupation of factories, and the continuous threats of universal nationalizations discouraged new investments. Capital surreptitiously fled the country in vast quantities. Production slowed down and sometimes came unexpectedly, without a reason, to a standstill in many plants. The state deficit, incredibly, grew higher than that of the U.S. federal government, and the inflation rate threatened to reach South American levels. The “economic miracle” of the fifties became but a nostalgic memory, a lost golden age.

Finally the Communists, who, deprived of their Socialist vassals and isolated in their ghetto, were supposed to wither away, acquired instead an all-pervading tentacular influence they had never previously enjoyed or hoped for. They seduced or terrorized the intelligentsia, more or less controlled schools, universities, newspapers, magazines, publishing houses, all means of communications, and through the trade unions, the economic life of the country. They infiltrated the bench and the bureaucracy. Many Italians, who were not convinced Communists, saw the way the wind was turning, and prudently, resignedly behaved as if they were true believers, naturally with the neophyte’s fanatic zeal, somewhat as their fathers had done as Blackshirts. Democratic opponents to the Center-Left, who did not fully trust the government’s programs and still thought the Communists a possible threat to freedom, somehow found themselves without jobs or occupying obscure positions inferior to their capacities. As a result many bright and ambitious young men emigrated to countries where advancement was based on merit and not political affiliation. One Italian writer I know changed language to make a living.

The Communists’ source of power was principally their capacity to stage riots anywhere at any time. The party had money enough to organize noisy and turbulent mass meetings a few blocks from the seat of the government by concentrating hundreds of buses and dozens of special trains on Rome within days. It could also paralyze the whole country overnight by means of general strikes, brutally enforced by strong-arm squads. Sometimes the party did not have to do anything. Threats were enough, veiled threats in Unità leading articles, in a speech in Parliament, or even unspoken threats. The saying went at the time that the Christian Democrats could do nothing that displeased the Socialists, the Socialists could do nothing that displeased the Communists, and, in the end, even if the Communists did not always get all they wanted, nothing could be decided that they did not like. Some of the most controversial laws were in fact passed with their votes or thanks to their abstention.

The idea that the Center-Left coalition could best defend the people’s liberty from the Communists was best criticized by Giovanni Malagodi, parliamentary leader of the handful of democratic opposition deputies, with these words, “You are making the same mistake the Romans made at the end. They entrusted part of the defense of the empire to Germanic tribes, related by blood, customs and religion to the Germanic tribes pressing on the border.”

Specialists in Italian affairs (diplomats, journalists, and professors of international relations in the best universities) were frightened by what they had helped to bring about. They concluded the country was hopelessly, incurably sick, as sick as Imperial China or the Ottoman Empire on their last legs, ready for extreme unction. They saw it correctly as rudderless, irreparably torn by irreconcilable social strife, led by weak, incompetent politicians, and drifting toward final bankruptcy and collapse, or at best, a totalitarian police regime on the Soviet model. They had to conclude that the Center-Left coalition, while inspired by the best intentions and based on sound information, had been a costly mistake that had produced more terrifying problems than it had solved, possibly only because its aims were too high and because it had been set up before the country was ready for it.

The Italians surprised them again. Like the soldiers at Castelfidardo and along the Piave, they refused to lie down and die. To be sure, most of the large basic industries and utilities, state-owned or controlled, managed by political appointees, packed for electoral reasons with superfluous workers who could not be fired, lost enormous sums of money yearly, some of them larger sums than their capital.

To be sure the small and medium private industries could not really save the country forever, but they proliferated and flourished, for a few years anyway. They invented new products, improved old ones, and exported them all over the world. Many specialized dangerously in chic luxury goods – fashions, shoes, leather goods – which, being dispensable, could mean that their customers would vanish in a depression, but others managed to beat the competitors in manufacturing advanced necessary products that would sell well in all seasons. Italian design triumphed everywhere. The wines beat their French competitors in the United States. The more expensive handmade cars dominated the playboys’ market. Films found a vast international public. Olivetti carved itself an honorable place in the world of electronic office machines. Italian companies, freed abroad from their legal entanglements, built dams, roads, bridges, airports, canals, ports, railroads, new cities, hospitals, hotels and universities all over the Third World. One firm even won the bids for a section of the New York subway. One man I met on a plane told me he built museums dedicated to local art in many newly created African republics and filled their showcases with admirable wooden sculptures and textiles that were made in Florence at his direction. The genuine ancient local product, he discovered, was scarce and hard to find. Made of wood or ephemeral fibers, it deteriorated beyond repair. The Florentine artifacts were much more satisfactory.

As a result of the well-intentioned but suffocating new legislation and of the paralyzing, ill-informed pressure of trade unions, old-fashioned piece-work was revived. Naples exported five million pairs of gloves a year, in spite of the fact that there was not one glove factory in the city. Most of the shoe industry, which practically came to dominate the world, was similarly organized. The majority of these enterprises kept diligently within the law, and paid their taxes and social security contributions in full. [MM: yeah, right.] The village of Castel Giubileo, near Mantua, which produced pantyhose at extremely low prices; Brescia, where iron rods for reinforced concrete works were made much more cheaply than anywhere else; and other similar towns were inspected by suspicious Common Market functionaries who found nothing amiss.[…]The experts were astounded. Once again it seemed Italy had saved itself in its own inscrutable way, without any public explanation or scientific exegesis foreigners could study. There were no reliable statistics. In fact the only way economists could estimate the growth of the gross national product was by comparing the yearly figures for the consumption of electric power. They concluded once again that Italy was an unpredictable country sui generis, which reached the brink but then somehow always managed to avoid definitive ruin and national dissolution. How did the Italians do it? What was their secret?

I visited Francesco Saverio Nitti at the end of World War II, shortly after he had returned to Rome from exile. A democratic liberal, considered one of the more authoritative intellectual opponents of the Fascist regime, second only to Benedetto Croce and Antonio Gramsci, he had spent the years of banishment in Paris, on the Rive Gauche, reading, writing, and thinking. He was one of the wisest, most intelligent, clear-eyed, and skeptical Italians alive. He was a revered scholar, the author of important books on politics and economics, a professor of finance at the University of Naples. He had been prime minister during some of the bloodiest and most turbulent years after the first war, from June 1919 until June 1920.

The Fascists hated him because he had kept his head, reorganized the forces of order, tried to enforce the law impartially and to strengthen the authority of the state. They contemptuously called him by a scatological nickname, “Cagoia,” and depicted him as a fat pig in their cartoons. The real reason for this hostility was the character of the man. He did not allow mass emotions to dictate his decisions, never tried to please the crowd, did not share (or make believe that he shared, as others did) the fanatical nationalist dreams that then flattered many people, consoled them in their misery, and assuaged their incoherent fears. Above all he seldom hesitated to call things by their ugly names and to announce unpleasant but necessary truths.

I went to see him because I hoped he, in his old age, had reached fundamental and definitive truths about Italian life, the laws governing it, and could explain to me why our countrymen, sober, cautious and realistic in their private affairs, could at times join demented political mass movements (Fascist yesterday and Communist after the war) and sometimes seemed to rush blindly, like lemmings, toward collective catastrophe and annihilation. I wanted him to tell me whether it was possible to figure Italians out and whether there was hope for them, one day, to govern themselves undramatically, reasonably, diligently, economically and prudently; why they so often preferred to be led by quacks; why so many of them were always looking for miraculous formulas, instant cures, and shortcuts; and why men like him were seldom entrusted with power and lost it quickly when they were.

Nitti was a small, round-bellied, bald man, not unlike, I must respectfully admit, the cartoonists’ pig, so small a man his feet barely touched the ground when he was seated. His eyes were small and bright, as bright as gems. He shook with laughter at my questions. I remember his answer exactly. His was not, of course, an all-compassing answer, a panorama of Italian history, an essay on the people’s psychology, which would have taken hours or days, but an epigram of only a few words, by which he probably invited me to explore on my own the many ancient causes of our national curse.

This is what he said: “Gli italiani sono stati ubbriacati di bugie per cento cinquanta anni.” (“Italians have been made drunk with lies for one hundred and fifty years.”)

I thought I knew what he meant. First of all, he was a Southerner, born in Melfi in Basilicata in 1868, and his bitterness represented the desperate disappointment of his countrymen from the old kingdom of Naples, who had felt swindled by history, deceived by “lies.” After the unification, in 1861, they had seen most of their hopes of cultural, social, and economic advancement shattered. The South had been shamefully neglected, they thought, had sunk into even more dismal poverty, lost the small dignity of its independence and proud local traditions without finding a suitable role in the new nation. Thousands of its rebellious peasants, led by fanatical legitimists, had been summarily slaughtered after the unification by the new Italian army, in a war of Vendean ruthlessness; millions more had been driven by hunger and despair to emigrate. At the same time, the North had begun timidly to develop industries and had known a modest prosperity.

The figure “one hundred and fifty,” while slightly inexact (it should have been “one hundred and forty-seven”) was also revealing. It evidently referred to the unfortunate short-lived republic, the Parthenopean Republic, set up in Naples by a small educated elite of liberal “patriots” (as they called themselves, loyal, that is, to their country and not to their sovereign), based on the principles of the American and French revolutions. Its weakness was the fact that it had been created, or rather, imposed on the people with the help of the French revolutionary army which had invaded the kingdom. The people, peasants, priests, soldiers, landowners, aristocrats, and cautious bourgeois, considered it the invention of the devil, a sacrilegious foreign importation, and fought it as they had fought the invaders. The idealistic founders were tried for treason and hanged by the Bourbon king as soon as he had been brought back to Naples from Sicily by the English fleet. Which were the “lies” at the time, I wondered, the radiant but premature delusions of the “patriots” or the anachronistic myths that surrounded the Neapolitan monarchy and preserved it for another sixty-one years?

“Lies” presumably also were the grandiose expectations aroused by the Risorgimento, which, like the Center-Left coalition a century later, was supposed to cure all Italian ills, solve all problems, produce wealth, spread literacy, transform all the people into democratic and well-behaved North Europeans, and open the road to national greatness and prosperity. United Italy turned out not to be exactly what many people had imagined, the people who had conspired, suffered jail and exile, fought and died. The final result was a rickety, divided, shabby, impoverished and backward nation, yet one that wasted its miserable resources trying to impersonate one of the world’s great powers.

Among the victims of such “lies” (which surely were not lies for them) had been the good Italian citizens, a minority, Nitti among them. Their Italy, the country they loved and served, tried with some success to prod its reluctant inhabitants toward the modern world, democracy, incipient industrialization, progress in many fields, and also managed to win the First World War. But this Italy was also one of Nitti’s “lies,” a thin papier-mache structure, the eggshell holding the national Humpty-Dumpty together, a make-believe country that never obtained the complete wholehearted support of all its incredulous citizens.

The biggest of Nitti’s “lies” surely were the myths of Fascist propaganda. The regime had created an imaginary Spartan country, in which all men had to make believe they were heroic soldiers, all women Roman matrons, all children Balilla (the Genoa street urchin who started a revolt against the Austrian garrison in 1746 by throwing one stone). This was done by means of slogans, flags, stirring speeches from balconies, military music, mass meetings, parades, dashing uniforms, medals, hoaxes, and constant distortions of reality. The Italians woke up too late from their artificial dream, those still alive, that is, hungry, desperate, discredited, the object of derision, cornuti e mazziati, or “cuckolded and beaten up,” governed as in the past by contemptuous foreigners in a country of smoking ruins and decaying corpses, from which most things detachable had been stolen and women raped.

But why were lies so necessary in Italian life? That, of course, was the problem. Nitti did not even try to explain.

Anglo-Americans, of course, are not Italians. Which may be fortunate – because we have been ubbriacati di bugie not for a piddling century and a half, but more like four hundred. Or at least three hundred. Moreover, despite this remarkable career of intoxication, we have never become so ubbriacati that we couldn’t hold our bugie.

Or even export them – for instance, to Italy. Hey, Tony! If you like our “diplomats, journalists, and professors of international relations in the best universities,” you’ll love our cars…

If you read the newspaper these days, which is probably a mistake, you cannot help but be struck by the increasing verbal intimacy between the business section and the Kingdom of Night. Is this just an accident of terminology, do you think? Or does it indicate something more sinister?

For example, everyone knows what a zombie bank is these days. They have also heard of the shadow banking system, which the Obama administration is doing its best to resurrect. And speaking of the Obama administration, UR readers will recall that our dear President got his start as an acolyte of a philosopher who dedicated his most famous book to Lucifer, Prince of Night – which by my calculations gives us two degrees of separation between Barack Hussein Obama and Satan himself. Not that any of this bothers anyone, of course. Why should it?

And are we dealing with one dark force, or many? For example, is a zombie bank the same thing as a shadow bank? Not at all. They are entirely different species of monster – no more alike than an orc and a troll. Indeed, we certainly have or at least had a shadow banking system, but it is not even clear that there was every any such thing as a shadow bank. Such deviltry will shock no student of the Hadean realms.

For today, let us confine ourselves to the subject of zombie finance. It may not be the only dark force in the underworld, but there is certainly enough to go around.

To put it succinctly, America is a zombie nation because it is no longer possible to imagine her without zombie finance. It was quite some time ago that we stepped across that black stream, from whose far bank none return. No, landscaping did not just put those asphodels in.

What is zombie finance? Zombie finance is the financing of zombies. To be more exact: you commit an act of zombie finance when you lend money to a zombie.

A zombie is an insolvent institution that continues to operate. An institution is insolvent if it is clearly unable to meet its present or future obligations. This definition is slightly trickier than it looks. The devil is seldom absent from the details, and we will indeed grapple with him there. But basically, the analogy of the living dead is quite accurate.

For example, a zombie bank is a zombie because the total market price of its assets is less than the sum of its promises to pay. Thus, it has no way to meet its obligations, even by selling all the things it owns. The zombie’s creditors must therefore meet, divide up its assets pro rata, and sell its executives as white slaves to the salt-pans of Tangier.

The law of bankruptcy, as handed down by sages of old, abhors the zombie. If the obligations of a zombie can be restructured, handing its bondholders a haircut but converting the result into a profitable operation, the majesty of the law is there with its machete. If the zombie is an inherently unprofitable institution, the majesty brings its axe instead, and has a grave handy.

I think most intelligent people understand this. They understand, generally, that this state of affairs is right and true, that it will hold in America in 2500 AD as it held in Sumer in 2500 BC, that not merely the whims of random, dead white men, but nature herself, abhors the zombie. The principles of accounting are not arbitrary. They are natural law.

But what I don’t think most people understand is what happens when we break this law. Opening a direct shaft between the vaults of the Federal Reserve Bank of New York and the Balrog-ridden mines of Moria. Which skip day and night with lithe, spidery orcs.

So let me explain what happens. But first, here is the main thing: your awareness of this issue may date to 2007 or 2008, but the black tunnel itself is far older. Zombies have walked the streets of Manhattan, rotting and unashamed, for decades at least – possibly even centuries. There is no past golden age in which our financial system was good and sweet and true, although this does not mean no financial system can ever be good and sweet and true.

The Anglo-American financial system is a lot like a New York State cabernet. I was once caught in NY on a Sunday before the laws changed and was compelled, quite unconstitutionally, to purchase a bottle of this material. So far as I can tell, a $20 North Fork claret has all the flavors that a ten-dollar red should have. It also has a number of other flavors, that it shouldn’t. Similarly, Anglo-American finance (which is far older than the 20th century) provides all the services that a financial system should provide, and more. Namely: it feeds the zombies.

Let’s take a closer look at these zombie loans.

Again, a zombie loan is a loan to an institution which is unable to pay its obligations. Because, after the loan, the zombie’s equity (assets minus liabilities) is exactly as negative as it was before the loan, no loan can restore the true warmth of life to the dead flesh of a zombie. Moreover, since a loan to a zombie cannot trade at par (someone has to take the haircut), the lender has lost money as soon as the loan is made.

So who would make a zombie loan? The answer is simple: only another zombie. But why would even a zombie loan money to a zombie?

Fool! The dead are beyond reason. This is what makes them zombies. Zombie finance is a money-losing proposition; zombies are money-losing institutions. The symmetry is striking and perfect. Of course zombies lend to zombies. This is one of the best ways to lose money.

The essential question about zombies is: what makes zombies so evil? The essential answer is: everything. But let’s pick a couple of salient points.

The first fact to understand about zombies is that zombies lie. There is no such thing as a truthful zombie. No zombie will come up to you and tell you that it’s a zombie. In the zombie’s opinion, its balance sheet is perfectly sound. After all, who knows what those assets are worth, until we sell them? A liability is a fact. An asset price is an opinion.

And therefore, in the view of both the zombie borrower and the zombie lender – both of whom are zombies – the borrower is just engaging in the natural practice of refinancing its debt. Of course, refinancing is indistinguishable from taking out a new loan to pay off an old loan. But if the zombie was not a zombie, it might have a perfectly good reason for doing this.

More generally, zombies act with ulterior motives. In reality, a zombie lender may have a perfectly good reason for lending to a zombie borrower. It’s just that this cannot be a financial reason. It must be some other kind of reason – generally an aromatic one.

For example, a common zombie structure is that of patronage. In a patronage hierarchy, money flows downward and power flows upward. A stream of uneconomic loans is an excellent way to cement a patronage structure, perhaps the best there is. While it is going too far to say that all zombies represent cases of patronage, it is certainly the structure to expect.

To count the mass of the client as part of his pyramid of power, the patron must own him body and soul, heart and mind. Gifts will win your client’s heart, but loans will win his mind as well. In a word, uneconomic loans create systematic dependency. When the client is an individual, this relationship is sometimes described as debt slavery. While one may disapprove of debt slavery for moral reasons (I do), there is no denying that it works like a charm.

Another common zombie structure is that of bureaucracy. Bureaucracy can be seen as a form of patronage in which the commodity distributed is not money, but power – personal importance. A bureaucracy adapts to maximize the number of “stakeholders” who influence each decision. Typically, it does so by eliminating formal personal authority, and replacing it with a structure of rules to which all may contribute. This approach of process-oriented decision-making is the best that bureaucracy can do; in a more degraded bureaucracy, power is also distributed through cliques and mafias which make decisions informally, using the process as camouflage.

But we have followed the chain of zombie finance only one step. Zombie X may lend to zombie Y, but who is lending to zombie X? If the answer is “no one,” zombie X will dry up and fail to meet its payments. And zombie Y will follow it.

You probably know the answer to this question. However, let us postpone it for a minute. We will ask it again when the awful consequences of the answer are fully clear.

The truth about zombies is that zombies act differently. Again, they have ulterior motives, and they are fundamentally dishonest. These corruptions originate in the financial structure of the zombie. However, they do not stay there. We are now in a position to see how zombie finance eats away at the structure of society.

Suppose A pays B. There are three good reasons for A to pay B. All others are zombie reasons, and the payment can be classified as a zombie payment. Otherwise, it is a live payment.

The first good reason for a live payment is that A owes the money to B. B is receiving the payment as part of a right. This is very well and good; we note, however, that this right itself is an asset, and must have been acquired through some means itself. Even if the right is ancient and the means was unwholesome, the unwholesomeness is in the past and not the present. Moreover, since this transaction is not voluntary, it is in a sense not a transaction at all.

The second good reason for a live payment is that A is purchasing some good from B. In the special case in which the good is B’s promise of a future payment, this is a loan. But whether the good is a loan, a house or a goose, A is giving up good money. If he did not prefer the good received to the money relinquished, he would not have made the exchange. While time may prove him incorrect in his appraisal, we know at least that he tried – and tried hard. We can thus describe this as a profitable transaction.

The third good reason for a live payment is that A is the benefactor of B. A intends the payment to benefit B, not to benefit A. This implies that A has some personal relationship with B, and gains emotionally from the act of improving B’s lot – a charitable transaction.

What we observe about the two voluntary forms of live transaction, profitable and charitable, is that both impose some discipline on B. It is this discipline that zombie finance destroys.

Profitability is a cold master. If B is a vendor of goods – loans to himself included – he must produce goods that appeal to A. He is presumably competing with many other such vendors. If he becomes ineffective or inefficient, he will not survive.

As a reactionary, this discipline is rose-sweet to me. For every productive activity in which humans engage, for every good way in which to get the job done, there are a thousand incompetent, wasteful, or otherwise dunderheaded ways. Like happy families, effective businesses are all alike. Every incompetent business is its own unique, special snowflake.

Consider a restaurant. I will grant that there are a million ways to run a good restaurant. Nonetheless, every good restaurant has good food and good service at a good price. For each such restaurant, there are a thousand ways in which, if its good management were replaced by bad management, it could be converted into a bad restaurant.

Order is order because it is easier to be disorderly than orderly. The tension of profitability is a divine weapon for the reactionary ideal of order. The reactionary state is orderly at the sovereign level, of course, but it is happy to maintain private corporations within itself – each of which must be profitable or at least solvent. And each of which therefore creates its own internal order, typically with an effective hierarchical command structure and a single leader who governs by personal authority.

It is not at all surprising that progressives hate corporations and the profit system. It is a natural consequence of the antipathy to order, the anarchism, the lust for entropic destruction, which is the foundation of their creed.

Moreover, where the discipline of profit leaves off, the discipline of charity takes over. Charity is the principle of the family and the church, both ancient pillars of order. Charity – true charity – produces discipline because true charity is in all cases a paternal relationship. In exchange for the gift of charity, the recipient surrenders his independence to the benefactor.

Charity is an asymmetric relationship of dependence, but it is not at all without structure. In true charity, affection is always matched by obedience. If B surrenders himself to the care of A, he becomes a ward of A. A, his sponsor, assumes the obligation to support him, and also takes responsibility for any misdeeds B may commit while under his sponsorship. In return, B gives up his freedom, or at least his freedom to disregard the wishes of A.

So in both cases, the cords of finance are taut. The stiff cytoskeleton of society is intact. The strong are disciplined by profit, the weak by charity. And money itself produces this discipline – no Order Castles, Spartan crypteia or Eton fagging are required, just the cold weight of gold in a man’s hand. (Have you ever held a gold coin? Bounced it off a table? It rings like a bell.)

Zombie finance enters this elegant structure of spontaneous order as sulfuric acid enters a coral reef. The beautiful creatures of the reef, exquisitely adapted, are also exquisitely sensitive. They are not exquisitely adapted to sulfuric acid, anyway. They die, and their bleached bones remain, perhaps with a coat of brown slime.

While there are only two types of voluntary transaction – profitable and charitable – the profitable transaction of lending, ie, the purchase of a promise of future money, almost deserves its own category. The loan is a ballet of such exquisite natural beauty that the mating fights of the Hawaiian monk seal, the stately, swirling parade of the hammerhead school, and the love song of the trilobite pale in comparison.

Consider the trust it takes, for instance, for A to say to B: I will give you money now, in exchange for your promise to pay me ten years from now. A ten-year loan! We think of this as an entirely normal transaction; in fact, it is remarkable. Think of how much order, sanity, and decency must exist in a society for A to have any confidence that ten years later, B will be good for it.

Indeed this transaction is remarkable in our society – for it is practically nonexistent. We do not have true ten-year loans. We have ten-year (nay, thirty-year) zombie loans.

From the borrower’s point of view, a loan is a loan. But a zombie loan is a zombie loan because no one, other than a zombie, would make it. It is made not for profitable or charitable reasons, but for zombie reasons. Instead of the discipline of the real world, it imbues the borrower with the dark ulterior motives of the zombie world.

To finance anything is to control it, and to accept zombie finance is to dip at least one toe in the waters of the Styx. Freed from the discipline of profit or charity, the zombie lender becomes a free radical, an agent of destruction. There is no bound on the strangeness of the motives under which the lender may be operating, or the hoops through which the borrower must jump.

We see this most clearly when we look at the ultimate zombie nation: the Soviet Union.

Obviously, Russia has not come close to recovering from the Soviet period. Russia was a cultural paradise; it became a tomb; it remains a graveyard. But I mean Russia in the late Brezhnev period, not Russia today (kleptocracy is no great improvement on bureaucracy).

When most people think of the difficulty of life in the Brezhnev era, I think they tend to think of either poverty in a strictly material sense – eg, sawdust in the bogroll – or, of course, the travails of the dissidents. However, as a student of history, the point that impresses me most is the great pointlessness of most peoples’ lives. (And no, most people were not dissidents.)

There exists a great film portrait of life in Poland in the ’80s, a primary source in some sense because it was actually filmed in Communist Poland – Krystof Kieślowski’s Blind Chance. The common thread in all three episodes is a feeling of general personal futility. The late Communist world was a world in which it was often your job to do strange, useless things badly, all day, for no good reason at all.

There is another world in which it is often your job to do strange, useless things badly, all day, for no good reason at all. This is the world of Dilbert. Many of us have experienced it.

My theory is that Dilbert and Brezhnev are the same thing. I call it Dilbert-Brezhnev syndrome, or DBS. While we are certainly not the Soviet Union, my theory is that America has contracted a rather serious case of DBS.

The Soviet Union was a world in which business bore no relation to profit. People did strange, useless things badly because, lacking the discipline of profit that enforces efficiency, they succumbed to ulterior motives. Their unprofitable enterprises, purportedly businesses, were in fact patronage structures.

America is a much more interesting case, because (aside from its endlessly burgeoning political system, including its grant-funded “nongovernmental” periphery), the industries in which we see Dilbert syndrome are private, profitable. Nothing in America today is Brezhnev bad, but it is getting there. Furthermore, we cannot compare the America of 2009 to itself – we must compare it to the America of 2009 that should exist. Where is the iron broom of competitive discipline? How can pointy-haired managers, HR red tape and sensitivity seminars survive it?

The answer, I think, is our friend zombie finance. We do not have Gosplan, but we have Wall Street. America is Dilbertized to the extent that Wall Street is zombified.

Let’s take the loans that created the housing bubble. These were zombie loans to a T. So, for example, Steve Sailer asks: where was capitalism? Why wasn’t anyone betting against these loans, and driving them down to their true value?

The answer is that the free market bears very little relationship to the process that distributed these loans. The loans were made because they could be securitized and given AAA ratings. Their AAA ratings were assigned by Moody’s, S&P, and Fitch, the three major NRSROs, which are not in any sense private corporations. They might as well be a Department of Ratings. Their operation is entirely bureaucratic. “It could be structured by cows and we would rate it.”

This bureaucratic seal of approval was created for the banking industry, in which these ratings were presumed to correspond to default rates – not through anyone’s wise judgment, but as a matter of regulatory fiat. They were also adopted by the unregulated shadow-banking industry (which incurred short-term liabilities to buy long-term loans, without the formal protection of official banking status) again not as a matter of prudence but a bureaucratic assumption. The shadow bankers saw themselves as living in a world in which the banks would not be permitted to fail. Besides, if they had any doubts, they could buy insurance from AAA-rated AIG.

And look at the houses these loans created! Millions of soulless, cookie-cutter, jerry-built McMansions in the middle of nowhere. If this isn’t the residential-construction version of the Virgin Lands Campaign, what is?

The Soviet system is sometimes described as state capitalism. But it was not the sovereign nature of the Soviet state that made its apartments ugly and its waitresses surly. Nor, I think, was it even the size of this gigantic, unicellular organism – plenty of large private companies (don’t miss this look inside Wal-Mart) can delegate considerable decision-making power, and even financial independence, to their lowest layers.

Rather, the Soviet system is an example of zombie capitalism. When resource allocation is not subject to the discipline of profitable exchange, everything decays and becomes foul. The coral bleaches, the slime burgeons.

My feeling is that American zombie finance is largely responsible for the appearance of DBS in the New World. Why is the country covered with hideous developments, strip-malls and chain stores? Because it has, or had, a financial system designed to finance these things. Many of us would prefer a Ritual to a Starbucks and a Joe’s Diner to a Burger King, but the chains have an unbeatable advantage: it is much easier for them to get a loan.

In the Soviet system, everything was one chain. You ate at Restaurant #26,719. You will note that every Starbucks store has a number as well, although for some reason they do not put it on the marquee. Starbucks is subject to the discipline of profit – but it is not as subject as it should be, because its sheer size gives it access to zombie money. Thus the generic can defeat the specific, blandness outcompetes character, and we drink charred cat hair rather than coffee.

But we are attributing quite a few disasters to this phenomenon, which we have not yet examined in detail. What is American zombie finance, anyway? Besides the late, distressing intrusion of acronyms, how can the undead escape the discipline of profit in our system?

First, let’s assign credit where credit belongs: our old friend, USG. Since only a zombie will lend to a zombie, and USG certainly lends to plenty of zombies, it must be a zombie itself. And indeed, we are unsurprised to discover that USG operates under neither the discipline of profit nor that of charity. (It does suffer the discipline of democracy, or at least “right-wing populism.” But this is an awfully frail thread with which to leash so big a dog.)

Thus, all zombie loans are ultimately government loans. A profitable government would make profitable loans; an unprofitable government is perfectly positioned to be the root of a patronage tree, regulated by bureaucracy. Understandably, Americans have a traditional dislike for the idea of government lending, so the process must be disguised. Fortunately or unfortunately, depending on your point of view, it is becoming less disguised.

The typical way in which government loans are disguised is to structure them as loan guarantees. Consider, for instance, the 30-year zombie loan with which you buy a house. This loan is a zombie loan because, in order to receive it, you did not have to find a private party who was willing to lend you money for a 30-year term. Nor did the bank who lent you the money. Nor did anyone.

The traditional banking structure which creates these loans works as follows: someone lent a bank money with a continuously-revolving term of 0, ie, made a “deposit.” The bank took that money and lent it to you with a term of 30 years. This is our old friend, maturity transformation.

Maturity transformation is zombie finance, plain and simple. If this transaction were complete as described, it simply would not happen, because no one would “deposit” in this bank. Reason: the bank cannot fulfill its present obligations without selling its loan, which equates to finding a new lender. Recall that this meets our definition of insolvency.

And this is true even if the market price of the bank’s assets exceeds the sum of its liabilities. Reason: an asset price is an opinion, a liability is a fact. If your bank is the only bank practicing MT, it can sell its assets and is perfectly safe. If your pyramid scheme is the only pyramid scheme in the world and you are at the top, you are just as happy a camper.

Systemic maturity transformation is not a free-market phenomenon because, in a free market, interest rates are not fixed. They are set by supply and demand at every maturity. If you transform demand for 2009 money into demand for 2039 money, you are driving the price of 2039 money in 2009 money up, and interest rates down.

But if those who demanded 2009 money had actually wanted 2039 money, they would have said so. Since they demand 2009 money, they are apt to demand it back in 2009. When they do, the price of the 2039 money that backs these loans will fall back again, and banks that back 2009 obligations with 2039 assets will find themselves insolvent.

Essentially, the depositor in a free-market maturity-transforming bank has bought into the loan-market equivalent of a market-manipulation scheme. You can make the price of anything go up by buying more of it, creating a paper profit in which your assets are “worth” more than you paid for them. But in order to actually turn less money into more money, you have to sell as well. This is the “burying the corpse” problem. A bank run is the banking equivalent of burying the corpse.

Enter USG. USG, via FDIC, “insures” (another Orwellian misnomer, as there is no insurable risk here) the “depositor’s” loan to the bank. In return, it “regulates” the bank by requiring it to follow its official lending criteria, NRSROs and all.

Any such loan guarantee is equivalent to a triangular structure of loans. Thus, what is really happening is that the “depositor” is lending to USG, and USG is lending to the bank. Because USG will not default to the depositor, the depositor does not care if the bank defaults to USG. Moreover, since USG only loans to banks that follow its lending practices, it might as well be USG making your home loan as well. (This, too, has had several layers of veil stripped away.)

This entire structure is dependent on that wonderful modern innovation, fiat currency. Fiat currency allows USG’s guarantees to be watertight. USG can never default, because all of its “liabilities” are defined in its own scrip. Thus it can loan as much money as it wants, to anyone, for any reason. All of America’s money in the old sense of the word has fallen, somehow, into USG’s vaults. Fancy that!

By the standards of 1909, Americans have no money at all. Rather, a dollar is a sort of loyalty point, frequent-flier mile or stick-on gold star. Thus, behind the increasingly threadbare Potemkin capitalism, we see much the same financial system as in the Soviet Union. To get a loan is to ask the State for some of its brownie points, which must be repaid not because the State needs the brownie points back, but simply because it (a) wants to maintain some level of demand for its rubles, and (b) would hate to forfeit the opportunity to compel you to serve it.

This is the basic problem with fiat currency. It can be used, in almost arbitrarily subtle and fiendish ways, to fill holes in balance sheets, making insolvent institutions look solvent and unprofitable ones look profitable. Paper money is embalming fluid – zombie juice. It can raise the dead from their graves, but it cannot bring them back to life.

Moreover, before the fiat age, governments performed the same trick, by protecting their favorite banks (ie, all of them) from the rigors of bankruptcy. To suspend the liquidation of a bank is to lend to it – effectively, to convert its liabilities into legal tender. The so-called “classical gold standard” of the 19th century was not a true hard currency, but a mixture of gold and paper. Gold convertibility provided some discipline, but still allowed for considerable monetary dilution – and, hence, zombie finance.

And note that our theory of the corrosive effects of monetary dilution is not at all original:

There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

You have probably heard this quote before. This is because the author is Darth Keynes, albeit in his Anakin phase. He would later practice what he preached.

And, as usual here at UR, we have saved the worst for last. We are not just afflicted by zombies. We are utterly in their hands. No mere twist of financial regulations can save us. We cannot simply cut off the embalming fluid. Charon provides no reverse commute across the Styx.

Think, for a moment, about balance sheets. A balance sheet lists what an institution owns, and what it owes – assets on the left, promises on the right. The conventional way to tell whether the institution is solvent or not is to total (A) the market’s bid price for the assets, and (B) the institution’s cost of fulfilling all its promises. If (A > B), the institution can trivially fulfill its promises by shutting down and selling its assets. It is therefore solvent. Otherwise, it is not.

(As we’ve seen, this solvency logic can be gamed – it does not take into account the effect of asset sales on market prices, instead effectively assuming a sort of just-price theory for interest rates. However, the balance sheet itself contains all the information we could want. For an accurate calculation of solvency that prevents maturity transformation, we need only treat assets and liabilities of different maturities as qualitatively distinct, like dollars and euros.)

Note that balance sheets display a pleasant associative quality. Acting purely in our heads, we can combine two institutions, X and Y, by merging their balance sheets. All promises from X to Y or Y to X are thus moot, and we can ask: is XY solvent?

We can use this property to theoretically consolidate an arbitrary number of balance sheets. In this way, we can go from the microeconomic level to the macroeconomic level. However, game-theoretic effects on asset prices become increasingly important as we aggregate all possible buyers for an asset into one entity. Again, you cannot make money by bidding up the price of a good which you sell only to yourself.

Often, when evaluating the solvency of an institution, no reliable accounting exists. Opaque balance sheets and asset valuations are not a novelty to the intrepid financial spelunker. Therefore, it is often useful to find other criteria. For example, one simple criterion is to ask: is money flowing into this thing, or out of this thing? If money is flowing out, it may be solvent and profitable. If money is flowing in, it may still be solvent, but it is probably not profitable – and it may well be neither.

What we notice is that, in what are supposedly normal economic circumstances, we see a continuous flow of money from A to B. In exchange, naturally, for promises of future repayment. Except when the credit markets break down, B takes a couple trillion dollars of A’s money every year.

Now, again, there are multiple explanations for this. If we look at B’s claimed balance sheet, it appears to be solvent. On the other hand, it includes many assets for which the only buyer is B itself. What can we say of these valuations? If B is insolvent, they are probably bogus, and if they are bogus B may well be insolvent. Otherwise, not. This tells us very little.

We note, however, the money flow. The money flow is negative. Money is flowing into B. This is consistent with the hypothesis that B is an insolvent and unprofitable operation. It is also consistent with the hypothesis that B is investing this money, ie using it to produce capital – farms and factories and patents – which will or at least could, in future, result in money flowing in the other direction. Sure. All I can say is: I’ll believe it when I see it.

So when you hear Obama or Geithner or any other luminary talk about “restoring the flow of credit,” you now know how to translate this. It translates as “restoring the flow of embalming fluid.” We are all zombies, and we must be fed.

The most plausible explanation of an economy that is continually borrowing more money, and taking on more debt, is that the entire economy, as a whole, is a money-losing operation.

Its addiction to borrowing is an addiction to zombie finance. A profitable lender would not be sending good money after bad. A profitable lender would cut the whole system off, cold turkey, and see which of its debts it can repay when it no longer has new loans to repay them with.

And this is what I mean by a “zombie nation.” It is not just the banks that need restructuring. It is the entire economy, because the entire economy is dependent on the continuous generation of new debt. This is the hallmark of the zombie. Beneath this soothing curtain of formaldehyde, it is not just Citibank that is insolvent and unprofitable; it is not even just GM; it may even be most American companies. Nobody’s profit margin is that wide.

America! Hail, chief of the dead. Alive you were the greatest, and death has barely touched you. You strode the world; you stride it still. Rule it, even – for of all dead things, you are the least dead. That furrowed brow is almost fresh. The frost upon it might well be sweat. That tan and bony fist still clasps its notchless sword.

But the scent is unmistakable. The beetles are already at work. Grosser fauna lurk. And what do we do? We do nothing. We serve a straw-packed corpse, nailed to a tall and ancient throne. Dead, festering, and nowhere near ready for the grave. And we smile as we go about our duties.

Today we are going to finish with the historical part of the series. Beginning with part 9, we move on to the practical material.

But not yet, because we are not yet done with history. We still have the 20th century to kick around.

The 20th century is surely our best-remembered century. It is also our worst-understood. I have spent a substantial percentage of my adult life trying to understand the 20th century. My conclusion: hardly anyone understands it at all.

That says, most of us know most of the relevant facts. The reality and the reality show are made out of (almost) exactly the same materials. In terms of all major factual events, the history of the 20th century that you learned in school is, so far as I can determine, correct – with one small exception.

(And what is that exception? “Why is there a watermelon there?” And no, it’s not the five key Jews behind Osama bin Laden.)

The difference is our interpretation of events. We know what happened. Why did it happen? Let me explain this question with an anecdote.

I apologize for neglecting the blog somewhat of late. I will get the Chinese spam out of the comments somehow, I promise, although I would really hate to have to turn on moderation. I liked one commenter’s idea of accepting it as an inscrutable contribution from the Oriental sages of old. As for the Jews, I admit it: I am their tool. I will deal with the subject more below.

Anyway, one bad excuse for this neglect is that I was in Ohio for Sibyl’s first birthday, getting her infected by a herd of sickly cousins. Sibyl’s aunt and uncle are very much blue-staters in a red state, and they live in a half-gentrified section of Columbus, “Olde Towne East.” (I feel the East deserves an extra E as well.)

Olde Towne Easte has seen some changes in the century of our concern. And not changes for the better. Basically, my sister-in-law, her husband and their two children live in a neighborhood of crumbling mansions. Some have now been restored. Some, like one we saw only three blocks away, are more or less crack dens.

My in-laws are not the people who built these mansions. They are not anything like the people who built these mansions. Nor is anyone in the neighborhood – not the SWPL Obama voters, not the Section 8 Obama voters. The world that built these mansions – the Midwest of Booth Tarkington (have a look at Penrod if you want to see Middle America before progressivism) – is no less dust than the Caesars. Yet its dwellings remain, mostly.

And all this is normal, of course. Completely unremarkable. While I was in Ohio, I asked people a simple question: what happened to Olde Towne Easte? Why did it decline? Why did the mansions of the town pillars of Columbus crumble? Why was the same phenomenon seen in so many other American cities? And where did all these people go?

I got not a single answer that made any sense. For example, people would say: “they moved to the suburbs.” Why? “It was a trend.” Indeed. My stepfather, who is a creature not of Ohio but of Washington, was crafty enough to know where this was going. “I used to own a big old house on Capitol Hill,” he said. “Do you know what it cost to heat?”

Have you ever heard of a civilized human society, anywhere on the planet, any time in the past, departing from its present location and moving singly or in atoms to another, unless it was in some sense fleeing? Not surprisingly, people did not like being asked this question.

“Urban decay” is a fact. You know urban decay happened, I know urban decay happened, Wikipedia knows urban decay happened. But as the page, obviously authored by some prominent chronicler of the human condition, so poignantly explains:

There is no single cause of urban decay, though it may be triggered by a combination of interrelated factors, including urban planning decisions, tight rent control, poverty, the development of freeways and railway lines, suburbanisation, redlining, immigration restrictions, and racial discrimination.

Perhaps I should edit the page and add heating costs. In other words: why did urban decay happen? It just did. Answer unclear – ask again later.

Our aim today is to restore narrative coherence to the 20th century, ridding it of mystical obfuscations, poltergeists, and winds of change. In UR’s 20th century, when things happen, they generally happen for a reason. The reason is generally the obvious reason.

Consider the paradox of the 25th-century historian. To him, which is the more complex century in European history? The 20th, or the 12th? If anything, it must be the 12th. For the student of history is also the student of government. And there were far more independent units of government in Europe in the 12th century, then in the 20th. Which makes for more intricate patterns of interaction. Which makes for more history.

Yet the story of Europe in the 12th century is regularly condensed to a few pages in standard textbooks. While I know more or less nothing at all about the history and historiography of the 12th century, I remain fairly confident that these compressions are decent representations of the period as it actually was. There is no reason for them not to be.

Imagine constructing such a compression of the 20th! How can we explain the 20th century in three pages, when it takes a whole paragraph of causes just to understand urban decay? And yet surely, the historian of the 25th will have no such trouble at all. Therefore, here in the early 21st, we know that there must be a simple explanation of the 20th century. Wikipedia just doesn’t know it.

It is our very proximity to the 20th that prevents us from constructing a plain and summarized understanding of it. Obviously, this comes as no surprise to the UR reader. We have trouble understanding the 20th century because we grew up in it, and our brains remain contaminated with its heinous memetic baggage. It is our Orwellian crimestop that prevents us from seeing the plain facts of the matter.

Most people think, in the slough of complacency, that it has always been this way. It has not. We see a thorough-going mendacity and a radical evil set free which was barely anticipated in previous ages, and only then was it anticipated by insightful prophets of the kind such as Dostoevsky and Burckhardt who stood at the beginning of this age. This condition of ours is one of those things that gives me pangs of despair. I do wonder if anything good can survive it. It is not just that it sullies art, history, philosophy, science, and any pursuit of truth, but that it destroys truthfulness, which depends above all upon something too old-fashioned and unquantifiable for our times: good character.

The 20th century was the golden age of lies. The liars of the 20th century, like the painters of the 16th, will be remembered forever as the Old Masters of their art. I know UR has many readers who are Christians or Jews, and sometimes I even regret my own inability to believe in God. But no one who knows anything about the 20th century can fail to believe in the Devil.

Lies are like snowflakes. Every lie is its own unique, perfect self. It is no more possible to list all possible kinds of lie, than all possible kinds of magic trick, or all possible patterns of camouflage. Each is defined only by its goal: misdirecting the mind of the audience. Producing the illusion of a reality that is not real, and obscuring the reality that is.

Every nation in the 20th century produced masterpieces of mendacity. Here is one, from Last Train from Berlin (1942), by the New Deal journalist Howard K. Smith. Bear in mind: Smith is observing the Nazi and Soviet regimes at a point in time at which the former has not committed millions of political murders, and the latter has.

On first glance, Germany [in 1936] was overwhelmingly attractive, and first impressions disarmed many a hardy anti-Nazi before he could lift his lance for attack. Its big cities were cleaner than big cities ought, by custom, to be. You could search far and wide through Berlin’s sea of houses or Hamburg’s huge harbour district, but you could never find a slum or anything approaching one. On the countryside, broad, flourishing acres were cut into neat checkerboards. People looked good. Nobody was in rags, not a single citizen. They were well dressed, if not stylishly dressed. And they were well fed. The impression was one of order, cleanliness and prosperity – and this has been of immense propaganda value to the Nazis.

There is a great fallacy here, and it is a mistake which an unfortunately large number of young American students I met in Heidelberg made and retained for a long time. The fallacy is in connecting this admirable order, cleanliness and apparent prosperity with the Nazi government. Actually, and this was pointed out to me by a German dock-worker on my first magic day in Bremen, Germans and Germany were neat, clean and able to do an amazing lot with amazingly little long before Hitler came to power. Such slums as existed were removed by the Socialist government and replaced with neat workers’ apartments while the Nazis were still a noisy minority chalking swastikas on back-alley fences.[…]Once, however, I broke my routine and took a trip to Russia. That land impressed me disgustingly favorably for a individual who was still more Liberal than Socialist. Contrary to the development of my reactions in Germany, Russia looked better the longer I stayed and the more I saw. Russia was not neat, clean, and orderly. Russia was dirty and disorderly.

But the spirit of the thing got me. The Bolsheviks did not inherit cleanliness and order; they inherited a wrecked feudal society, and in a relatively short period wonders had been done. The edges were rough and the effort was amateur. But that was just it; it was amateur, everybody was doing it. You got the impression that each and every little individual was feeling pretty important doing the pretty important job of building up a State, eager and interested as a bunch of little boys turned loose in a locomotive and told to do as they please. It showed promise like a gifted child’s first scratchings of “a house” on paper. Klein aber mein; a little but mine own, as the proverb goes.

What is more, the standard of living was definitely rising, not falling. The whole picture was not as pretty as the German one, but the atmosphere, utterly devoid of any trace of militarism or racial prejudice, was clean and healthy as the streets were dirty. I knew all along the atmosphere reminded me of a word, but I couldn’t think what it was until I got back to Germany. The word was “democracy.” That, I know, is a strange reaction to a country which is well known to be a dictatorship, but the atmosphere simply did not coincide with the newspapers’ verdict.

The quality of this propaganda is beyond comparison. Goebbels had talent – there is no denying it. But as a patriotic American, I believe our product is a step beyond.

If there are two words that summarize the above, perhaps they are sincere mendacity. Perhaps not all the journalists of the New Deal, or their heirs of today, were (while not of good character) perfectly sincere. But at worst, even when they consciously lied, they thought of themselves as conveying a higher truth. And when they lied they did so as individuals, not cogs in a machine. Goebbels, who was more or less the pope of Nazi Germany, is not in the building.

The result is a wonderfully chummy tone. You are grateful to your friend, Howard K. Smith, for seeing beyond the simplistic, superficial appearance of Nazi prosperity and Soviet barbarism, and helping you feel the deep and subtle reality of Nazi incompetence and Soviet democracy.

The Smiths of today omit the first-glance impression of Nazi Germany, but in 1942 this was not possible. Let’s be clear on the facts: while German meticulousness is not a myth, the transition from Weimar to Third Reich was indeed responsible for much of the “admirable order, cleanliness and apparent prosperity.” This probably does not change your mind about Nazis, Nazism, or Hitler. And nor is it intended to. It is not a point much stressed these days, that’s all.

Good primary sources are more essential than ever for anyone seeking an accurate impression of prewar Nazism. For a fair anti-Nazi source, try Stephen Roberts‘ House that Hitler Built (1937). For a fair pro-Nazi source, try Francis Yeats-Brown‘s European Jungle (1939).

Both these books will leave you seeing the Third Reich in color. But if you are satisfied with black and white, a modern history (I like Michael Burleigh’s) of the Third Reich is perfectly acceptable.

My perception is that the portrait of Nazi Germany we get from Howard K. Smith, his uniformly synoptic colleagues, and of course their present-day successors, is basically accurate – in analysis as in facts. They portray National Socialism as fundamentally demonic, and indeed it was. In this, they are right and their opponents are wrong. In other things…

The easy error is the assumption that because National Socialism was demonic, its enemies were not. Smith’s portrait of Russia is a brief masterpiece of sincere mendacity. Since truth plus fiction equals fiction, the whole – even with its fresh, clean Germany – becomes an even more staggering masterpiece, enhanced rather than disqualified by its factual fraction.

The New Deal’s picture of the Soviet system has since been corrected, of course. Its picture of the American system has not. And no prizes are available for guessing which category the latter fits.

Thus the standard story of the 20th century includes one set of actors which are portrayed accurately (the fascist regimes), one set which was portrayed inaccurately but has since been repaired with the assistance of whiteout (the revolutionary regimes), and one set whose mythos remains gloriously intact (the democratic regimes). From this stew, clarity is not to be expected.

The reactionary student of history has a great advantage here. To the Nazis, the Soviets and the New Dealers alike, “reactionary” was a term of abuse. The pre-1918 regimes can be described as reactionary, but proto-fascist tropes are also easy to see in them. Every trope of Hitlerism can be found in Wilhelmine Germany. Here, too, the New Dealers are right.

So in the 20th century, the reactionary is without dog in the fight. The reactionary review of the 20th century is obvious: a criminal tragedy, with some comic notes.

And while not all the crimes in this tragedy were committed by democrats, democracy is indeed its prime and ultimate cause. It is not a coincidence that the century of murder and the century of democracy were one and the same. Perhaps the only one to predict this was – no surprise – Carlyle, in Shooting Niagara (1867):

All the Millenniums I ever heard of heretofore were to be preceded by a “chaining of the Devil for a thousand years,” — laying him up, tied neck and heels, and put beyond stirring, as the preliminary. You too have been taking preliminary steps, with more and more ardour, for a thirty years back; but they seem to be all in the opposite direction: a cutting asunder of straps and ties, wherever you might find them; pretty indiscriminate of choice in the matter: a general repeal of old regulations, fetters, and restrictions (restrictions on the Devil originally, I believe, for most part, but now fallen slack and ineffectual), which had become unpleasant to many of you, — with loud shouting from the multitude, as strap after strap was cut, “Glory, glory, another strap is gone!” […] And in fact, THE DEVIL (he, verily, if you will consider the sense of words) is likewise become an Emancipated Gentleman; lithe of limb as in Adam and Eve’s time, and scarcely a toe or finger of him tied any more. And you, my astonishing friends, you are certainly getting into a millennium, such as never was before, — hardly even in the dreams of Bedlam.

But we are getting ahead of ourselves. Here at UR, we always try to complete the trial before delivering the verdict. So: the 20th century.

It is easy to explain the 20th century. The story is simple, because it is a conflict of armed doctrines, rather than of human personalities. Even the personalities of Hitler and Stalin can be abstracted into their armed doctrines. It is not possible to imagine the 17th century with a French king other than Louis XIV, but it is possible to imagine Nazi Germany with a Fuehrer who wasn’t Hitler.

On the democratic side, the “leaders” are almost figureheads, and the actors are almost interchangeable. They are classified rather than named. For example, I am not sure precisely what I mean when I describe someone like Howard K. Smith as a “New Deal journalist.” But I know his tone is the same as that of Leland Stowe, or Quentin Reynolds, or John Gunther. Or that of James Reston, C.L. Sulzberger, or Herbert Matthews.

The major armed doctrines in the Second German War, for instance, were Universalism, Nazism and Bolshevism. These can easily be taken as examples of the class: democratic, revolutionary, and counter-revolutionary. We consider these in reverse order.

A counter-revolutionary is anyone who fights against revolution. This category can be divided roughly into three parts: reactionary, conservative, and fascist.

Since I am a reactionary, I decline to discuss the creed here. Suffice it to say that reactionaries are always right. And there were few enough in the 20th century that we can ignore them.

A conservative is someone who helps disguise the true nature of a democratic state. The conservative is ineffective by definition, because his goal is to make democracy work properly. The fact that it does not work properly, has never worked properly, and will never work properly, sails straight over his head. He therefore labors cheerfully as a tool for his enemies.

As for a fascist: you know all about fascists. If you want to know anything about fascists, ask a liberal. He will tell you instantly, and he will be right. No regime has ever labored so diligently or so long over the crimes of its defunct foes.

Since there is a bit of misinformation mixed in with the truth, however, I should go into at least some detail.

Basically, fascism is the rightmost end of the tradition that in British politics is called Tory Democracy. It is perfectly legitimate to compare Sarah Palin to Hitler, for example. While they are obviously very different figures, both can be described as Tory democrats. The same can even be said of William Pitt, a threesome that would make an interesting panel discussion. And an even more interesting threesome.

The basic method of Tory democracy is to appeal to the masses to support a non-democratic, ie reactionary, form of government. The basic problem of Tory democracy is that the masses suck. Therefore, if you practice Tory democracy, your movement is liable to become contaminated with all sorts of heinous nonsense, such as anti-Semitism.

The American conservative movement practices the most rigorous possible message control to avoid this fate. It has no enemies to the left, and no friends to the right. And still, it is not enough. It is permanently tarred with the brush of Hitler, just like the old prewar Republican Party, the party of Taft and Vandenberg and Borah and Bricker, of which it is the faint, pathetic ghost. This was the party of the Schofields, of Olde Towne Easte, and like them it is no more.

The old world of Biedermeier, of Central European haute-bourgeois aristocracy, is exactly as dead. But there were many attempts to preserve it, and fascism was one. Conditions are ripe for fascism when there exists an old tradition which is in the process of being destroyed by democracy, but has not yet quite been destroyed. The half-recreated fascist tradition is half reactionary, half democratic, and all nasty.

If you want to see fascism in its pre-Nazi state, take a look at Friedrich von Bernhardi’s Germany and The Next War (1911):

The struggle for existence is, in the life of Nature, the basis of all healthy development. All existing things show themselves to be the result of contesting forces. So in the life of man the struggle is not merely the destructive, but the life-giving principle. “To supplant or to be supplanted is the essence of life,” says Goethe, and the strong life gains the upper hand.

Hitler was a genius, I admit, but he wasn’t smart enough to have actually invented this swill. And why does it appear in Germany around this time? And Russia, and Austria-Hungary? Because all three are being democratized, and jingoism is an excellent way to appeal to the masses against the elite. It works in Britain too, by the way.

When fascism ascends to power, it creates a coherent central authority (good) which is not responsible in any way (bad), maintains itself in power by indocrinating its subjects (bad), and practices unnecessary and sadistic violence (bad). Thus we have one good and three bads, which makes bad. It is not surprising that fascism is generally considered bad.

However, since we have one good, it is not surprising that it can accomplish good as well. For example, it is just the bee’s knees for crime, and may even be the least of two evils. Mussolini did a fine job with the Mafia. Imagine him in Mexico now.

The most gross misstatement about fascism presently understood, however, is that the Axis constituted a plot to take over the world. It is truly amazing that people believe this today, for there is no evidence for it whatsoever. However, most historians simply treat it as a given.

If you want an accurate military history of the Second German War and its aftermath, which is also a primary source, I recommend Albert Wedemeyer‘s memoir on the American side, and Erich von Manstein‘s on the German. Both dispense with this myth, giving it exactly the short shrift it deserves.

Manstein, for instance, points out that Hitler never displayed any emotional interest in going to war with England, even after he was at war with England. Hitler was a man of extremely fixed ideas. These ideas are all set down in Mein Kampf. One of these ideas was that Germany needed to expand to the east. Another was that it needed to have England as a friend. And obviously, he wasn’t getting to America unless he went through England (or both Russia and Japan).

For example: if the Axis was a plot to take over the world, why did Japan never attack Russia? Answer? Because Japan and Germany were acting as independent, sovereign nations. They were not acting under any kind of central command, and they had no great trust in each other. They just happened to have similar forms of government and had signed a few token pacts of understanding.

That was the whole point of the war: a rebellion. Japan and Nazi Germany fought because they wanted to be independent, as did Imperial Germany. They lost, so they became provinces in a world empire. That’s how it goes.

Whereas the Allies were already acting as a single world authority, which was called the “United Nations” even during the war. Ergo: what we are seeing here is a good old case of projection.

If you have a plan to govern the world – not, of course, to win total world domination, but to strive for comprehensive global governance – and you go to war with someone, by definition, he too has a plan for total world domination. Inasmuch as you lose, he wins. Therefore, once the Second German War was started, someone had to win it, and I’m glad the Allies did.

On the other hand, the Second German War – as well as the First – looks a lot more like a rebellion against said single world authority. The conquest between America plus Britain plus Russia, and anyone else, is not and cannot be a conquest of equals.

The question of the peace of the world, universal and perpetual, is now one of the uppermost in all thoughtful minds. Even those who do not believe that such a state of human society is desirable or realizable are compelled to struggle with the idea. Universal peace, which seemed a little while ago the dream of disordered brains, has suddenly transformed itself into the waking vision of the soberest and clearest of intellects. This world-peace, the signs of whose coming are now many and unmistakable, will not be established between men and nations as so many separate units or groups, standing apart with different and unshared interests, agreeing to let each other alone and to respect each other’s rights at a distance. Such a peace, even if it were possible, would be at best only a negative one, having little vitality and little power for good. Universal peace will come rather through federation and cooperation.

“Agreeing to let each other alone and to respect each other’s rights at a distance” is, of course, the principle of the old school of nations, the reactionary school, who practiced the forms that used to pass under the strange name of “international law.” You can still find these old laws – in Vattel, in Polson, in Davis – and interesting reading they make, indeed. The world they are describing is not the world we live in.

And it certainly isn’t be the Imperial Germany of the World! As Trueblood muses at one point:

But when arbitration has at last come into general and permanent use throughout the civilized world, as there is every reason to believe that it will after a generation or two, then these great military establishments with all their abominations will come to an end. The end of them may come suddenly, as the result of a great war, or a series of great wars, the disastrous results of which will be so deeply and universally felt that the nations will never again permit militarism to take root and grow.

Indeed. A prescient prediction! Note, however, that causality and prediction are easily mistaken for one another. Similarly, John Gunther‘s Inside Europe (1936) describes its subject as “between the wars.” Perhaps the lady doth protest too much.

From Trueblood, George Herron’s Menace of Peace (1917), with its hilariously over-the-top anti-Teutonism, is not far off. I will not excerpt this book. It must be read in its totality. But suffice it to say that Woodrow Wilson employed Herron – as a peace emissary. Some peace!

Herron is good for laughs, but a more serious successor is Ramsay Muir, whose Expansion of Europe (1916) has a wonderful explanation of the principle of “blue imperialism” that would develop, through weird transatlantic osmosis, into Foggy Bottom’s present aid-ocracy, operated not on the principle of dominion but that of dependence:

The words ‘ Empire ‘ and ‘ Imperialism’ come to us from ancient Rome; and the analogy between the conquering and organising work of Rome and the empire-building work of the modern nation-states is a suggestive and stimulating analogy. The imperialism of Rome extended the modes of a single civilisation, and the Reign of Law which is its essence, over all the Mediterranean lands. The imperialism of the nations to which the torch of Rome has been handed on, has made the Reign of Law, and the modes of a single civilisation, the common possession of the whole world. Rome made the common life of Europe possible. The imperial expansion of the European nations has alone made possible the vision—nay, the certainty—of a future world unity. For these reasons we may rightly and without hesitation continue to employ these terms, provided that we remember always that the aim of a sane imperialism is not the extension of mere brute power, but is the enlargement and diffusion, under the shelter of power, of the essentials of Western civilisation: rational law and liberty. It is by its success or failure in attaining these ends that we shall commend or condemn the imperial work of each of the nations which have shared in this vast achievement.

“Mere brute power,” as the reader of Herron might expect, turns out to be the German principle of imperialism. We also must note that there was more than a bit of brute power in the old British Empire, which organism did not survive its passing. Imperialism seems to have something to do with military domination after all. Who’d of thunk it? Not the Romans, surely.

Finally, it is incumbent on us to consider the actual origins of the First German War. What happened was: Britain was the sponsor of France, France was the sponsor of Russia, and Russia was the sponsor of Serbia.

Serbia started behaving very badly – by Vattel’s standards. There is no doubt that the Serbian cabinet was an accessory before the fact to Sarajevo. (Try Sidney Fay‘s Origins of the World War.) In Vattel’s world, Austria had every right to invade Serbia, and it was none of anyone’s business. Certainly not Britain’s!

In Benjamin Franklin Trueblood’s world, of course, it was incumbent on Austria to make peace before making war. I can’t help noticing that Benjamin Franklin Trueblood’s world, now that we have it and all, (a) doesn’t have a whole lot of peace, and (b) does have a whole lot of terrorists. Perhaps this is not a coincidence.

The general behavior of Britain and the Entente before the First German War was to provoke Germany in every way possible, but to make the result appear as if Germany was itself acting unstably and aggressively. The unsurpassed chronicle of this story, for its brilliant writing as well as its early date, is Francis Neilson‘s How Diplomats Make War (1915). I will not excerpt this. Read the whole thing. It is timeless.

Neilson was a friend of the great Albert Jay Nock, with a similar writing style. Like Nock he was a Georgist, which occasionally produces a slight kooky effect. But he was also an MP who in a Britain of another day would have been in high office – an unbelievably learned and expressive man, after the time of his institution. If you really want to immerse yourself in the Second German War, go through interlibrary loan and get Neilson’s almost-unobtainable 5-volume diary of the war, The Tragedy of Europe. It is unsurpassed. Neilson is constantly wrong in his analysis, in all the little things – and right about almost everything big.

The origins of the Second German War are somewhat more debatable. However, they originate in the Treaty of Versailles, which originated in theories of history which by the 1930s had become discredited among scholars. Most responsible statesmen agreed that the confiscation of German territory by the French client states of the Little Entente, Czechoslovakia (which you may search for on a map today) and Poland, was unjust.

Therefore, we may consult our Vattel and reason that Germany had every right, under classical international law, to go to war with Czechoslovakia, Poland, Russia, or anywhere else. The fact that Nazi Germany invaded Poland does not, believe it or not, imply that its next step would have been to invade Brazil. Frederick the Great invaded Silesia in the 18th century, and he made no claims whatsoever to Brazil.

Fascism existed in a world of Benjamin Franklin Truebloods, who were attempting to replace Vattel with Benjamin Franklin Trueblood. Dangerous itself, it had dangerous enemies. It did not attack the democracies unprovoked. Like the Confederates, who were more than a little fascist themselves, its attacks – even those of Hitler – can be seen as a case of “fear biting.” Hitler would have accepted unconditional peace with America and Britain at any time.

While we are discussing misconceptions, another common misconception which is seldom uttered, but often assumed, is that the Allies entered the war to save the Jews from Hitler.

At least, the Allies often seem to get credit for this, although factually we know that (a) they had no interest in saving Jews before the war, (b) no interest in saving Jews during the war, and indeed (c) preferred not to mention Jews at all.

The Jews of the New Deal were Universalist and assimilationist, not Zionist – they were not even particularly fond of the backward, Yiddish-speaking Jews that Hitler was killing. (If you hear the word “jargon” used to refer to Yiddish, you know you are in the presence of a German Jew whose nose needs breaking.) In fact, far from it being Allied propaganda, the New York Times actually covered up the Aktion Reinhard. But the guilty flee where no man pursueth, and tremble when accused of offenses they have not committed.

The Aktion Reinhard is not even really part of the history of the Second German War, because it had almost no impact on that war. It was not used as propaganda until after the war was over. It is best considered as the first event in postwar history. And indeed, entire histories have been written around it. It is no exaggeration to call it Hitler’s greatest gift to his followers.

We here at UR are not in the business of ranking political murders or murderers, so we will respectfully decline the implicit invitation to compare Hitler to Stalin, Genghis Khan, etc, etc. We can just say that none of them were nice guys, and the same is true of FDR. But at least FDR left a corpse that someday could be dug up and hanged, like Cromwell.

So this is fascism: a dangerous and aggressive movement, with even more dangerous and aggressive enemies. I’m afraid there are not a lot of good guys in this awful century, the 20th.

And fortunately, the other two groups are the same discussion. Revolutionary doctrines are best seen as a subclass of the more important democratic class. A revolutionary democracy is one in which power changes hands through violence. Otherwise, the two are the same form, and they will generally be found in alliance.

For example, in my survey of Soviet Life back issues, it became immediately clear to me that the Soviet 19th century and our 19th century were the same century – the same laundry list of democratic heroes is celebrated.

(If you need a prequel to the 20th century and you are only allowed one book, perhaps that should be C.B. Roylance Kent’s The English Radicals, A Historical Sketch (1899). The Radicals of the 19th century, English and otherwise, are indeed these great progenitors. And a sorry lot they are – when the sketcher is not a Radical.)

Moreover, this relationship did not end like clockwork in 1900, or in any other year. The official sentiment of kinship between the Western democratic establishment and the Soviet Union, though often imperiled by the latter’s various heinous crimes, was never really severed – not even in 1947, with the Anglo-Soviet split. Simple proof of this fact is the extreme variation in Anglo-American treatment of the national socialist and international socialist regimes.

If you care to see the Soviet side of this continuing relationship, you could try reading the memoir of Alexander Feklisov, who was or at least claims to have been the handler for many KGB agents in USG before 1947. These agents – by Feklisov’s own description – were not the same types of people as the random low-life losers, like Aldrich Ames, who we remember from Newsweek articles.

No. They were people like Alger Hiss, Harry Dexter White, Laurence Duggan, and perhaps even Harry Hopkins, and they were at the center of the New Deal state. It is simply inconceivable that these people were in any sense spies, or that they concealed anything from FDR. They were his direct agents. These contacts must have been authorized informally at the highest level, and they must have been considered a normal backchannel by those who participated in them.

Governments everywhere operate in a conspiratorial style. Ie: they keep secrets. Often they keep secrets even from their own employees, or some subset thereof. This requires activities that appear nefarious. Since they are authorized, however, they are not nefarious at all. At least not in the context of FDR’s regime, which was one of personal authority at the top.

However, since they are authorized, they are no less official. Therefore, the regime can be held responsible for them, as for all its official acts. (It can also be held responsible for its official sins of omission, but that’s another post.)

The relationship between the democratic bloc and the revolutionary bloc is like the relationship between an Appalachian father, Bobby Ray, and his teenage son Dwight. Dwight is a hard case, no doubt about it. Bobby Ray does not condone his activities in the slightest. In fact, the two are even found screaming at each other and a few times have come to blows. Sometimes they don’t talk for months, and once Bobby Ray once hit Dwight so hard with an axe handle, he broke the axe handle.

But Bobby Ray and Dwight are family. You know, if the revenuers come, Bobby Ray and Dwight will be standing together. It is true that Dwight done shot that man down in Campbell County, but Bobby Ray obviously is not concerned in that. And besides, he deserved it.

During the Armistice all of the Allied and Associated Powers were involved in supporting attacks by “White” armies against the Soviet Government. In Siberia, the United States and Japan were supporting the White Army of General Kolchak. From the Black Sea, the British and French were supporting the White Armies of Generals Denikin and Wrangel. The Allies, including the United States, had taken Murmansk on the Arctic to prevent large stores of munitions, sent to aid the Kerensky regime, from reaching the Communists. Later the British supported a White Army under General Yudenich in an attack directed at Petrograd from the Northern Baltic.

The British and French exerted great pressure on Mr. Wilson for Americans to join in a general attack on Moscow. General Foch drew up plans for such an attack. Winston Churchill, representing the British Cabinet, appeared before the Big Four on February 14, 1919, and demanded a united invasion of Russia.

The Americans then experience a sudden change of heart. Not only that, they ponder the large war debts owed by their allies to them. In an internal note by Tasker Bliss:

It is perfectly well known that every nation in Europe, except England, is bankrupt, and that England would become bankrupt if she engaged on any considerable scale in such a venture.

Ie: “Hey, can you guys really afford that?” Hoover himself supplies additional reasons, in a letter to Wilson (bear in mind that Hoover had considerable experience as an engineer in Czarist Russia):

We have also to… [consider], what would actually happen if we undertook military intervention. We should probably be involved in years of police duty, and our first act would probably in the nature of things make us a party with the Allies to re-establishing the reactionary classes. It also requires consideration as to whether or not our people at home would stand for our providing power by which such reactionaries held their position. Furthermore, we become a junior in this partnership of four. It is therefore inevitable that we would find ourselves subordinated and even committed to politics against our convictions.

In other words: no way is the Light of Democracy, the Republic of Eagles, going to help put the old Baltic barons back in charge. Time’s arrow has moved on, baby. The wind of change is blown. The great experiment must commence.

And indeed, the British and French pulled their support and the Whites were slaughtered. (Many of the Whites were more brown than white at this point, anyway. Hitler was not the inventor of anti-Semitism.) The Soviet Union was the world’s first pure progressive state, although its violent succession and lack of free elections places it in the revolutionary, rather than democratic, category.

Although the US did not recognize the Soviet Union until (obviously) 1933, there were strong ties of friendship well before then, just as there remained such ties after 1947. Alger Hiss and his ilk obviously would have felt quite self-righteous in feeling that they were being prosecuted for a policy that was official when carried out. Nor would they have betrayed this secret. They were, after all, honorable men.

The truth is that, from an ideological level at least, the revolutionary states are best considered as American client states. They are very different from normal client states, such as France (I take it as understood that the USG of today has clients, satellites or puppets, not friends, allies or neighbors).

The normal client state can be described as a total client – it is friendly with all important elements in the sponsor state. The revolutionary states were (and are) partial clients – they are friendly with some elements in the sponsor state, and hostile (often to the point of actual war) to others.

The hostile elements are typically the problem of the friendly elements, and the client at the very least diverts their energy. Thus, the relationship is profitable to the sponsor. In return, the client needs the sponsor, because the friendly elements protect him from the wrath of the hostile elements. Thus the relationship is symbiotic, and can continue for decades.

So, when you ask: why were there American soldiers in Russia in 1919, anyway, if what Hoover says is true? The answer is the same in all cases. They were fighting a partial war. They were not intended to win, and in fact they didn’t. This, too, is not an isolated event. Nor is the demise of the regimes who made the mistake of getting to the right of American “public opinion.”

So, for example, during the Molotov-Ribbentrop Pact, Stalin did not become an enemy, like Mussolini, or even a neutral under intense pressure, like Franco. He was a loved friend who had made a terrible mistake. America’s goal in interacting with Stalin during the years of the Pact was, as usual, to convince him of American friendship and woo him back to sanity.

So, for example, after the demise of the Soviet Union, everyone (including me) expected the world to enter a millennium of peace. Fat chance. The evolutionary niche was unoccupied, and the next-generation neo-revolutionary regimes of Iran, Venezuela, etc, have arisen to fill it – not to mention that wonderful fossil, North Korea.

For the New Dealer and his successors, the world-straddling geniuses of Foggy Bottom, the rule for handling a partial client is simple: whenever it does something bad, the only solution is to placate it. You will note that this is also the recipe for generating the worst possible teenager. This is not anyone’s conscious decision, as usual, but I would not describe it as a coincidence.

In contrast, the rule toward actual enemies is simple: press them as hard as possible, threatening constantly, never taking yes for an answer, always responding to some new concession with some new demand, never being afraid to use violence, and always going for the jugular when the jugular is in sight.

In the second half of the 20th century, actual warfare was generally unnecessary – countries such as Rhodesia, South Africa and (early in the 21st) Israel were easily intimidated into suicide. And Rhodesia was the only true enemy nation – USG had strong friends in both South Africa and Israel, these people being of course citizens of the world. It can have partial enemies, just as it can have partial friends.

The reason that since 1945 we have not seen USG fighting to its right – where it fights without mercy – is simply that it has no true enemies, having defeated them all. Thus, we never get to see its real fangs. It is only in a historical sense that they even exist. Nonetheless, it is a fundamentally carnivorous organism, and I suspect its lack of prey is a major cause of its present difficulties.

Therefore, what we discover today is that the Democrats are right: transnational bureaucracy is the true spirit of USG and of American democracy. Even the governments of Europe, conquered, occupied and reconstructed right down to the brains of their subjects’ children in 1945, are more pure expressions of the American political spirit, of democracy itself, than is found in America itself. This is completely normal with an exported ideology. However, the purest, most refined, and most American form is transnational bureaucracy. And the Soviet Union was no more than American democracy in Russian translation.

It is actually the counterrevolutionary forces in America – the conservatives, the Christians, the “Amerikaners” – who are the most un-American of Americans. They have spontaneously reinvented old European forms of government. For example, while America is a Protestant country by descent, Christianity of the salvationist or “born-again” flavor is a dead ringer for the niche of Catholicism: it satisfies the natural human craving for discipline, obedience and spiritual authority. I’m not saying it’s good, but it works, sort of.

Also, while conservatives believe in democracy, they believe that democracy is best used as a tool to make the government act less like a democracy, ie, to not be socialist. Socialism is the stable state of democracy, for obvious reasons. By making the people universally dependent on the State, their minds as well as their bodies can be controlled. The conservative thus spends his time agitating for un-democratic policies in a democracy – his goal is reactionary democracy. Obviously, if the People can be made reactionary and persuaded to stay that way, this works. But one could just as easily invest one’s efforts in inventing water that isn’t wet.

(Hey, I never said this wouldn’t hurt your head.)

Our interpretation rather absolves Mr. Hiss and his ilk, personally, of collaboration with the crimes of Stalin. But unfortunately, it transfers that responsibility onto the New Deal itself.

The Anglo-American progressive establishment, having spawned the Bolshevik monster in their minds, inflicted it on the chief backwater of Europe, shielded it from its foes in its youth, and fed it money and equipment, not to mention lives and territories, in its prime. It is therefore indicted, on the good general principle of Roman law in which the master is responsible for the deeds of his servant, for the crimes of the Soviet Union.

That it never actually ordered the murders at Katyn, for example, is not particularly relevant. It arguably made them possible. It is certainly an accessory after the fact, because it accused the Nazis of having perpetrated them, while knowingly closing its eyes to the truth.

And if you want to know how I can put USG in the same category as the Third Reich, that is my answer. I consider view both criminal regimes which history will rejoice to see abolished, because I feel that Washington can no less escape the crimes of Moscow than the Wehrmacht can escape the crimes of the SS.

Nor is the motive mysterious. During the Second German War, the New Deal became a true one-party state. Its enemies were not simply defeated. They were barred from legitimate political or intellectual occupations for life, and this ban was not revoked at the end of the war. (Consider the case of John T. Flynn. Then, read his Roosevelt Myth.) Indeed, this descent from freedom of speech is the ancestor of our modern political correctness.

With the Nazis and the Japanese, everything that was not Universalist – everything counterrevolutionary, everything old – went down in flames. Even if it was not physically destroyed, it simply became unfashionable. An aristocracy is not an aristocracy unless it is both good and powerful, and if it loses its power it rapidly ceases to become good. And that power ended up in Washington, courtesy of Benjamin Franklin Trueblood.

This is true even in the US itself, which has no true reactionary elite and has had none for quite some time. The postwar American conservative movement is a 1950s forgery – not unlike the fake Presidential candidate of 1940, Wendell Willkie, who was a Democrat until the year before the “election.” If you don’t realize that this party is fraudulent by 2009, there may be no hope for you. It is not and has never been a real opposition. It should disband itself at once.

Moreover, since the publication of George Victor’s extremely convincing Pearl Harbor Myth, it has become clear that the long-bruited rumors of FDR’s prior awareness of Pearl Harbor are quite simply true. (If you doubt this book, just go to “Search Inside” and look at the back cover. And yes, this is the exception.)

Victor’s book is also unusual because he is a supporter of FDR. He believes that governments must sometimes act in Machiavellian ways, and he thinks USG did the right thing in going to war with Nazi Germany. The same can be said of Thomas Mahl, whose Desperate Deception recounts the assistance of British Security Coordination, accounting for two whole floors of Rockefeller Center, in getting the US into the war – by every dirty trick imaginable, including forgery of public documents and political warfare against American politicians, all with FDR’s clear blessing.

Moreover, even if Victor’s controversial hypothesis is not true, it is quite clear that the US intentionally provoked Japan into war in order to enter the Second German War. See the best book of how and why the US entered the war, Back Door to War by the diplomatic historian Charles Callan Tansill. For all those who complain of Bush’s illegal war in Iraq, thou shalt complain no longer. See, how UR hath quieted your frets.

All this is no more than the normal operating procedure of a criminal regime. Its misdemeanors are as miserable as its felonies are appalling. USG must atone for these deeds, and it can only atone with its life. Its employees, however, should receive unconditional amnesty – it is the ideology and the institutions, not the individuals, that must be held responsible.)

I refuse to admit that a criminal sovereign can subsequently become legitimate without at least some substantial breach in symbolic continuity. It is not the deeds that trouble me – power is always bloody. It is the lies. Moreover, now is always a better time than later.

The fundamental argument on which USG rests its present legitimacy and its claims to “world leadership” is its moral supremacy. It has none. Indeed, as we will see, it has less than none. Far from saving the world, USG has wrecked it. The least it can do is apologize and go home.

There is a traditional analogy, not much used in the 20th century, which perhaps can be adapted to tell us the story of the 20th century in one little anecdote. Let me give it a shot.

The upas-tree, as is well known, kills all animals which approach it. What’s less well-known is that it kills all the trees around it, as well. (It needs a clear space in which to hunt.) This un-neighborly result is the effect of a toxin which the upas-tree’s roots secrete.

But the upas-tree itself is not immune to its own toxin. It is just more resistant than its neighbors. When they are dead, it itself is merely dying. But it must succumb all the same. For it was not evolution, but grim destiny, that designed the upas-tree.

In case it’s not obvious, in the reactionary version of the 20th century, the upas-tree is America and its toxin is democracy. Thus we see the same result: American democracy is the last philosophy standing. Not because it is sweet, but just because it is more lethal to its neighbors than itself.

What underlying pattern produces the upas-tree effect? There’s actually a simple and appealing answer. Democracy looks just like the memetic equivalent of an invasive, parasitic species.

The parasite’s native habitat is most resistant to it. The Anglo-American countries are the most resistant to democracy, because they are the native habitat of democracy. They thus harbor not only the roots of democracy and its most diverse expressions, but also its most potent natural enemies. Thus they degrade slowly without any sudden descents into anarchy.

In the presence of said enemies, political pluralism is a chronic, degenerative, probably still terminal, but slow and manageable condition. When this parasite jumps to another species of tree, however, it meets no defenses, and the victim shrivels, blackens and burns overnight. So the same effect is seen when kudzu jumps from Japan to Arkansas, as when democracy jumps from England to France.

The international democratic movement predates 1900, of course. It predates America herself. The leftist or democratic tradition in Anglo-American history is almost four hundred years old. If you read Hobbes’ Behemoth (‘Or, The Long Parliament’), it’ll pop right out at you in 3-D. Our upas-tree is indeed of considerable antiquity, and it was toxic from the very cotyledon.

Whereas in the democratic version of the 20th century, all this death and destruction is the fault of the enemies of democracy. Therefore, the experience of the 20th century demonstrates that human civilization can no longer tolerate the existence of nondemocratic states – since they caused all this death and destruction. Flawless logic!

And so we see democracy conquer the world and produce an outbreak of peace. At least in those areas properly conquered by democracy. Is it ill-mannered to note that the conquests of Genghis Khan had exactly the same result? To conquer is to pacify. The fact tells you nothing.

Basically, the self-interpretation of Universalism today is that America conquered the world in self-defense. Which may be, but it sounds strangely. We also are to understand that America conquered the rest of the world for its own benefit. Again, perfectly plausible.

But did it benefit? Actually? Did anyone? Actually?

Consider the world of Penrod. This book is really a must read, not for the hapless Penrod Schofield, but for the quality of Tarkington’s writing, and the wonderful rendering of the world in which Penrod lives.

The world of Penrod is the world of Olde Towne Easte, or at least those who once lived in those mansions. Tarkington himself was an Indiana man, but it’s all the same. Fake to begin with – but not without a certain grandeur, acquired through time and tradition. It is as gone as Caesar’s ghost. What killed it? The same thing that killed everything else. USG.

The world of 2009 is the root-ball of one ancient gigantic, shaggy and rotting redwood: the Anglo-American tradition we call Universalism. In the redwood’s shade are the seedlings she has thrown among the blackened stumps at her feet. Some of them have prospered and some have not. Some have even evolved a little, but all began as redwood seeds.

In a typical Orwellian fabrication, we call the “nations” of the UN era independent countries. Most are American satellites at best, possessions at worst. Even those that have recreated something like sovereignty, Russia and China, are sterile and uninteresting upstarts, with no real relationship to the old-growth civilizations of the Romanovs or the Ch’ing. Europe also contains some genuine trees, though their independence is questionable and their individuality is nil. They are pallid clones of Massachusetts, planted in grim, mechanical rows. Latin America is a shambles – a festering sink of crime, tyranny and disorder. Africa makes it look healthy.

And everywhere, everywhere – except of course the Anglo-Saxon core – tyranny and rebellion, war and destruction, anarchy and murder, dragged their plow at least once across the land. And not always once. For many, they remain permanent conditions of normal life.

Consider this, which the Times in a strange War Nerd moment plays, almost, for laughs:

BISSAU, Guinea-Bissau — Just after sunset, the general got up from under his favorite mango tree. As he climbed toward his second-floor office, a remote-controlled bomb under the staircase exploded, crumpling the building’s flank into a jumble of rubble.

His nemesis, the president, died less than 12 hours later, after heavily armed men fired a rocket-propelled grenade into the front door of his house. They shot and hacked to death the man who had ruled this tiny West African nation for 23 of its 35 years of existence, leaving behind sprays of blood, a rusty machete and bullet casings.

In almost any other place in the world, the death of a democratically elected president and the chief of the armed forces would be met with horror. But in this former Portuguese colony, the brutal murders of President João Bernardo Vieira and Gen. Batista Tagme Na Waie have been greeted with not just equanimity but optimism.

“Good riddance to both of them,” said Armando Mango, a lawyer in Bissau. “We have been held hostage by these guys for too long.”

Indeed. Three cheers for Mr. Mango! For far too long indeed. But how, exactly, did Guinea get to be in this state? What happened?

Ms. Polgreen is not so kind as to inform us. And while at a certain practical level it becomes difficult to give a shit about the rest of the world, the upas tree is not immune:

TONY BRANCATELLI, A CLEVELAND CITY COUNCILMAN, yearns for signs that something like normal life still exists in his ward. Early one morning last fall, he called me from his cellphone. He sounded unusually excited. He had just visited two forlorn-looking vacant houses that had been foreclosed more than a year ago. They sat on the same lot, one in front of the other. Both had been frequented by squatters, and Brancatelli had passed by to see if they had been finally boarded up. They hadn’t. But while there he noticed with alarm what looked like a prone body in the yard next door. As he moved closer, he realized he was looking at an elderly woman who had just one leg, lying on the ground. She was leaning on one arm and, with the other, was whacking at weeds with a hatchet and stuffing the clippings into a cardboard box for garbage pickup. “Talk about fortitude,” he told me. In a place like Cleveland, hope comes in small morsels.[…]The number of empty houses is so staggeringly high that no one has an accurate count. The city estimates that 10,000 houses, or 1 in 13, are vacant. The county treasurer says it’s more likely 15,000. Most of the vacant houses are owned by lenders who foreclosed on the properties and by the wholesalers who are now sweeping in to pick up houses in bulk, as if they were trading in baseball cards.

Piranesi’s Rome, cows in the Forum and all. Though I’m not sure Cleveland is safe for cows.